Confirm from Ubuntu 11.04... since my last Update (don't know if Flash or Nvidia was updated) i get those "smurf videos" in youtube as well. Disabling the Hardware acceleration in the Flashvideo did fix it... although this couldn't be a solution.

So to sum it up I think we have currently these options:
- switch to older version of Flash Player – can't recommend since there are unfixed vulnerabilities; however 10.3 line seems to be still maintained
- uninstall libvdpau1 – not recommended since you can still use HW acceleration in desktop players like Totem and mplayer
- disable HW acceleration in Flash – the easiest way to go; however the settings window doesn't respond under Compiz so you'll have to switch to e.g. Unity 2D to untick that checkbox
- fix the problem at libvdpau level – there's somewhat hacky patch by Nvidia which swaps U/V planes at libvdpau level when the tracing is enabled: http://www.nvnews.net/vbulletin/showthread.php?p=2518770#post2518770 – so far this seems to be the only solution how to use the most recent version of Flash Player with hardware acceleration and correct colours
- use native HTML5 video on YouTube – just a quick fix for blue kittens: http://www.youtube.com/html5

I wonder if any other GPUs are affected too – Udovdh mentions ATI and I've seen some reports with Intel GMA. To my knowledge, only Nvidia supports VDPAU, Intel has VA-API and ATI has XvBA. It would be really surprising if Flash could use all three of them – and not so much surprising if all three options were broken.

Jelyfish: This really depends on how the video player is implemented, from what I have found only YouTube, Brightcove (which is used by many other sites), and Viddler use Stage Video. See http://www.adobe.com/devnet/flashplayer/stagevideo.html – there's a nice demo with Big Buck Bunny where you can switch between Stage Video and regular video to see the bug in action.

Udovdh: In case of VDPAU, there's tracing available which is the best way to determine what the applications sends to the GPU.
But since Flash Player is doing hardware detection on its own, I'm afraid it won't be easy to mock another hardware and change Player's behaviour.
Given how the aforementioned patch for libvdpau works, we can assume that the problem is on Adobe's end (Flash Player sends wrong data), since none other player with VDPAU support has the same problem.

The only other case I can think of is broken feature detection, where the NVidia driver (or less likely libvdpau) gives Flash Player incorrect information, but I don't find it very likely; I believe NVidia would fix their driver (given that their staff actually care about this issue) and Radeon didn't have the same problem.

It is a problem with flash and the Hardware Accelerated feature provided by it. You have 2 choices, or you disable it in the flash plugin "right click on a flash content and then select Settings and disable the Hardware Acceleration, or you'll have to wait for a correction.

Here with my 9800GT (latest proprietary drivers), chromium (latest) and flashplayer (latest) it works like a charm but I already had a similar problem.

The problem can come from the libvdpau librarie.

Adding those lines into the /etc/adobe/mms.cfg file can solve the problem too :
EnableLinuxHWVideoDecode=1
OverrideGPUValidation=1